JD Wetherspoon today scrapped plans to ban smoking in all its pubs within the next three months.
The group said it would put off a total ban until the introduction of new legislation preventing smoking in the workplace, due to come into force in 2007.
Announcing the move alongside a 21 per cent rise in half-year profits to £27.4 million, chairman Tim Martin said the goalposts had moved after the Government decided to bring forward a national ban by 18 months.
In addition, sales at the 49 pubs that JD Wetherspoon converted into non-smoking outlets have fallen - down 7.6 per cent in the three months to January 22 - as customers spent less at the bar and playing on fruit machines.
One analyst warned ahead of today's results that JD Wetherspoon would probably be the pubs sector's "biggest loser" under a multilateral smoking ban.
Although Mr Martin accepted that a smoking ban remained "the main issue for the future", he believed sales would recover over time and cited evidence from Ireland, California and New York.
He said the conversion process was a good learning experience that had given JD Wetherspoon extra kudos, but added: "We had hoped that people who didn't like smoking would come flocking to our pubs but they've flocked elsewhere, it seems."
Mr Martin also sounded an upbeat note on licensing legislation that was introduced in November and allows pubs to open later.
Fears of binge-drinking were wide of the mark and sales figures showed that it had not led to an average increase in consumption, Mr Martin said.
The profits performance for the six months to January 22 was ahead of City expectations of around £25.5 million and was achieved on the back of a 1 per cent increase in turnover to £406.3 million.
A stronger operating margin of 9.8%, compared with 8.6% a year ago, reflected improved pub profits and efforts to eliminate needless costs at its head office.
JD Wetherspoon announced a year ago that it would convert around 10% of its pubs to non-smoking outlets, followed by the rest of its estate in May.
Mr Martin said today: "It is clear from our experience and from the evidence of other areas, such as Ireland, California and New York, that the initial effect of a smoking ban can result in sales and margin declines.
"However, we believe that sales and margins can recover over time, once customers adjust to the non-smoking environment."
A further 36 JD Wetherspoon pubs will become non-smoking outlets in three weeks' time when new laws in Scotland preventing people from lighting up come into force.
On current trading, JD Wetherspoon said like-for-like sales in February increased by 1.9%, although this was helped by soft figures a year earlier when sales declined by around the same amount. Profits and cashflow continued to be enhanced by a cost-cutting drive.
"The imminent Scottish smoking ban, combined with the potential impact of the football World Cup in June and July 2006, leads us... to take a cautious view of the possible outcome for the second half of the current financial year," Mr Martin said.Reuse content